# Thread: Help with setting up loan payments

1. ## Help with setting up loan payments

I tried setting up a loan wherein I am receiving payments. I receive a fixed \$100 twice per month at 6% interest. I don't care about the number of years I just want it to calculate the balance after payment and move on. I don't do this on any regular basis so it is not working out for me. I tried the "loan calculator" and that is not working out. thank you.

2. The Balance at any moment of time
= Previous Balance * (1+6%/24)-100
= Previous Balance *1 .0025 - 100

6%/24 = (6% annual interest) / (24 payments/year)
Steve

3. thank you for helping. I think its working.

4. I'm not sure how this works. It looks like you gave me two options. I elected to use the 2nd because it worked but I don't see in the formula how it's working.

5. (1+6%/24) is 1.0025

6. I only gave 1 option. I just presented the calculations 2 way to show where they come from. The amount owed increases by 6% every year, so increases 6%/24 each "Half-month" [=1 + 6%/24 = 1.0025] and it decreases \$100 every 2 weeks (-100).

Steve

7. OK, I understand that. Can you tell me what the 1 means and the 1.0025? thanks.

8. The interest is 6%/24 (6% per year divided by 24 payments per year).
That rate applies to the principal (multiplied by). Rather than take P * 6%/24 and then ADD P to the interest, you want 100% of the existing principal + the interest. So, 1+.0025 is 1.0025. Hope this helps.

9. The 1 is about the "current" the 1.0025 is the current+ interest
The Balance at any moment of time
=(Previous Balance) + (Increase from Interest) - Payment

The Payment was stated at \$100 twice per month (=24 times per year)

The Increase from Interest must be calculated. It is equal to the (Previous Balance) + 6% Ann Interest.
With payments twice/month you have 24 payments / year which means that at each payment period the increase due to interest is 6%/24 = 0.06/24 = 0.0025
So the Increase from Interest = (Previous Balance) * 0.0025

Putting it all together
=(Previous Balance) + (Increase from Interest) - Payment
=(Previous Balance) + (Previous Balance) * 0.0025 - 100

Rearranging:
=(Previous Balance) * [1 + 0.0025] - 100

= (Previous Balance) *1.0025 - 100

Steve

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